Multiple choice general knowledge

Capitalisation on Term account and Target account is done_________ basis

  1. Yearly

  2. Half yearly basis

  3. Quarterly Basis

  4. Every Month

  5. No Capitalisation concept in Term and Target accounts

Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Term account and Target account capitalization occurs semi-annually, meaning interest or earnings are calculated and added to the principal twice per year. This half-yearly compounding frequency affects how quickly the investment grows compared to monthly or quarterly alternatives. Yearly capitalization would be less frequent, while quarterly or monthly would compound more frequently.